Trade nailbiter
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Trade nailbiter

Though neither US presidential candidate is likely to soften on China, a Biden victory may mean a more multilateral orientation

A lot is at stake on Nov 3 when all eyes will be fixed on the poll results of the US presidential election, which could greatly impact the world over the next four years.

It will be a showdown between incumbent president and Republican nominee Donald Trump and Democrat nominee Joe Biden.

Not only do they stand in stark contrast in terms of appearance and public discourse, but their campaign policies also epitomise differing views of how the US government should operate domestically and in international affairs.

As a long-standing ally of the US, Thailand will be among the countries directly and indirectly affected by the outcome of the election.

The US is Thailand's fourth largest trading partner in the world following Asean, China and Japan.


The trade policies of the two candidates are similar, said Visit Limlurcha, vice-president of the Thai National Shippers' Council.

"But what Thailand has to prepare for and cope with if Mr Trump wins the election is a greater intensity to the trade war with China, forcing more Chinese firms to relocate their manufacturing bases," he said.

In the event of a Democrat victory, Mr Visit said the trade war is unlikely to expand. Trade spats are expected to be settled by negotiations.

With a Biden win, he expects China to become more active in foreign investment, notably in Southeast Asia, including Thailand.

"Although the intensity of the trade war between the two economies may drop if Mr Biden wins the election, we expect a proliferation of trade barriers regarding the environment and climate change by the US, as happened before during the Obama administration," said Mr Visit.

The US-China trade war is likely to continue no matter the victor, but Thailand may see changes in international trade agreements if Mr Biden rises to power, said the Federation of Thai Industries (FTI).

FTI vice-chairman Kriangkrai Tiannukul thinks the trade war, which has mostly consisted of tit-for-tat tariff increases on each other's merchandise goods, will continue because both candidates want to appear to protect the interests of the American people.

"If Mr Trump wins, the trade war will escalate because he is concerned with trade issues," said Mr Kriangkrai.

The situation should not be much different if Mr Biden wins, but "we may see some hope for negotiations under a Biden administration," he said.

Mr Kriangkrai was responding to an analysis by the New York-based think tank Council on Foreign Relations, which said Mr Biden and Mr Trump have different stances on trade issues.

The former prefers trade liberalisation, while the latter has no interest in trying to solve trade disputes through the mechanisms of the World Trade Organization (WTO).

Under the Trump administration, strict enforcement of US trade law is its primary focus, according to the US Department of Commerce.

The department earlier set Nov 9 as a deadline to conclude a probe into an allegation that companies in Thailand dumped tyres in the American market.

Mr Kriangkrai believes the investigation is related to the protracted trade war because three of the five firms being scrutinised are Chinese operators using Thailand as an export base. The other two companies are Thai-owned.

"Even if they are not Chinese-owned, they would not avoid the probe," he said.

The investigation should continue regardless of the presidential election result.


Thailand may see a change in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) if Mr Biden wins.

CPTPP replaced the Trans-Pacific Partnership (TPP), a similar trade pact that included the US until the Trump administration decided to withdraw.

CPTPP is made up 11 signatory countries whose economies represent 13.4% of global GDP, some US$13.5 trillion.

"The US may come back to the CPTPP" if the new president is Mr Biden, said Mr Kriangkrai.

The TPP was supported during the Obama administration, when Mr Biden was vice-president.

Although Mr Biden did not explicitly voice support for a multilateral trade pact, it is highly likely he would make the US return to the negotiating table regarding CPTPP to counter China's increasing dominance in global trade, said Somjai Phagaphasvivat, an independent academic.

"Thai businesses may have to pay more tax because the country has yet to join the CPTPP, if the US rejoins that trade pact," said Mr Somjai.

"Under this scenario, Thai businesses might relocate to Vietnam [a CPTPP member] for tax benefits in trade."

In terms of bilateral relations between Thailand and the US, Mr Trump seems to "selectively" support human rights issues in accordance with the US's interest, he said.

For instance, the Trump administration has voiced support for the Hong Kong protests and the US Congress passed a bill to support Uighur human rights, but the president has failed to show support for asylum seekers and refugees.

If Mr Biden becomes president, he will likely prioritise human rights issues. In the context of Thailand, Mr Biden would probably voice support for the demands of the Free Youth Movement, which could complicate governmental relations between Thailand and the US, said Mr Somjai.

Thailand did not file an application for membership during the CPTPP Commission meeting on Aug 5 in Mexico.

For the past two years, the Commerce Ministry has reiterated that joining the CPTPP is a necessity if Thailand wants to compete regionally and globally because it would increase the country's economic performance and draw in potential investors.

Opposition parties and some public groups oppose membership, saying tariff-free access to other CPTPP members could lead to a flood of agricultural and pharmaceutical imports, hurting those industries in Thailand.


A second-term Trump administration would push for more tax and expenditure cuts, more deregulation, and a unilateral trade policy that uses tariffs, export controls and foreign investment reviews to open doors for American products and services abroad, as well as to protect markets at home, according to Deutsche Bank research.

At the opposite end of the spectrum, a return to multilateral engagement is Mr Biden's plan for trade and international relations. The US would likely remain in the World Health Organization, return to the Paris Climate Accord and restore the enforcement capability of the WTO, said Deutsche Bank.

A more multilateral orientation need not imply a lessening of pressure on China in response to US complaints about subsidies and unfair trade, investment restrictions as well as forced technology transfers.

"We don't expect a President Biden to remove most of the tariffs Mr Trump imposed on China in 2018 and 2019, but we don't expect him to add many new ones either," said Deutsche Bank.

Tariff reductions would still be conditional on China agreeing to improve the access of American firms to Chinese markets, reducing subsidies for state-owned enterprises that engage in international trade, and protecting intellectual property rights more forcefully, said the analysis.


Pimchanok Vonkorpon, director-general of the Trade Policy and Strategy Office under the Commerce Ministry, said the upcoming US presidential election is significant to the global economy and trade because most economies were battered by the pandemic.

"The ministry is watching the election as the US is a key trading partner and the two candidates could pursue different trade and economic policies," she said.

Ms Pimchanok said the crux of Mr Trump's policy is likely to continue to centre on "America First", placing American companies before all other interests, with a single corporate tax rate of 21% and tax benefits set up to help individuals and families. These policies are set to expire in 2025, and would likely be extended in a Trump second term.

"Given the foreign policy stance of the US, it is highly likely a returning president Trump would maintain a unilateral policy, hoping to gain bargaining power over trade partners by claiming to protect the interests of Americans. This would mean a focus on bilateral negotiations, or putting more pressure on trade partners to protect US interests," she said.

"Moreover, trade pressures with China are likely to intensify, leading to rifts on other issues such as human rights, politics and administration, eventually causing US production bases in China to relocate back to their homeland. Efforts to isolate China are expected to become more intense, creating continued uncertainty for the global economy."

Mr Biden's key policies focus largely on the environment and support the use of clean energy, said Ms Pimchanok. This may affect Thai exports of cars with internal combustion engines, she said.

The US is the sixth largest market for Thai exports of such cars, valued at $696 million, which accounted for 4.72% of Thailand's overall exports in the first nine months this year, said Ms Pimchanok.

Mr Biden's more compromising approach to trade relations could mean more tax relaxations with partner nations, such as the EU, after barriers were set up by the Trump administration, she said.

"If Mr Biden wins the election, the ongoing Sino-US trade war is expected to ease, and this would benefit Thai exports, especially products in Chinese supply chains such as computers and electronics, rubber and plastic products, wood and wood-related products," said Ms Pimchanok.

"At the beginning of next year, Thai exporters need to prepare for a change in international trade policies."

In 2019, two-way trade between Thailand and the US totalled $48.6 billion, accounting for 10.1% of Thailand's total international trade value.

Thailand fetched $31.3 billion from exports to the US last year (accounting for 12.7% of Thailand's total exports), with imports from the US worth $17.3 billion (representing 7.32% of total imports).

Thailand had a trade surplus of $14 billion with the US last year.

Key export products included computers, rubber products, automobiles and parts, gems and jewellery, electrical appliances, garments, seafood, canned fruit and furniture.

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